Almost simultaneously to the announcement of UK’s Financial Conduct Authority (FCA), the European Securities and Markets Authority (ESMA) has issued an update on its work on the sale of CFDs, binary options and other speculative products to retail investors.
In the document the regulator expresses concern that monitoring and supervisory convergence seem to be insufficient in curbing the risk to retail clients and it considers to use its product intervention powers under Article 40 of MiFIR. The products in question are CFDs, rolling spot forex and binary options.
According to ESMA’s statement, the process is in a relatively early stage and is still to be decided what the content of the measures will be and how they could be applied. Any measures reagrding CFDs and binary options, however, will take into account the number of measures that have been adopted or publicly consulted on by EU National Competent Authorities. These measures include leverage limits (Cyprus, UK), guaranteed limits on client losses (Germany), and/or restrictions on the marketing and distribution of these products (France, Belgium).
The measures can only come into effect from January 3, 2018 and first must be approved by the ESMA Board of Supervisors.